tv Nightly Business Report PBS August 26, 2014 6:30pm-7:01pm PDT
♪ this is "nightly business report" with tyler mathisen and sus susie gharib. so close. the dow jones industrial hits an intraday record and the s&p above 2000. if you missed the rally, there are still a few stocks one market watcher says are worth buying. teaming up, merck and pfizer, two fierce competitors, now partners with a common goal. combatting a certain type of cancer. and to do lists. as the kids head back to school, we have a checklist of dos and don't for your portfolio, whether you're 20, 40 or 60. we have all that and more tonight on "nightly business report" for tuesday, august 26. good evening, i'm susie gharib. tyler is off tonight. wall street doesn't usually get excited about a two-point move in stocks.
but today was different. and historic. it took just a two-point gain for the s&p 500 index to cross and close above the 2000 level. its 30th record so far this year. there was some euphoria about the dow, as well. the blue chip average hit a record high of 17,153 in intraday trading but pull back by the close. some good economic news helped fueled today's gains. consumer confidence climbed to its highest level since 2007. also driving stocks, an unusually high number for big ticket orders called durable goods. those numbers jumped more than 22%. skewed by international demand for aircraft and record orders. here's a look at the closing digits. the nasdaq up 13. and the s&p up two points to the new milestone, 2000.02.
our guests watched every move of the s&p today. after all, aaron begins gibbs is with s&p capital iq and joins us now. erin, so nice to have you with us. >> thank you. >> it looks like the s&p 500 index is on track for its best august since the year 2000. so 14 years. how do you see things going between now and the end of the year? the s&p is now at 2000. do you see it going higher, down or staying the same? >> i really expect it to about stay the same for the rest of the year. it's somewhat dependent on the federal reserve. if -- right now, wall street is expecting the federal reserve to raise rates around the second quarter of next year. if they decide to -- or indicate they're going to raise rates earlier in 2015, we could see a bit of a correction starting at the end of this year. >> because that is the question that a lot of people are wondering, now that it's gotten this high. is it time, you know, that we're
going to see a correction. what are the chances of that happening, do you think? >> again, it's really dependent on the federal reserve. and, again, that's dependent on wage growth and indications of inflations. but overall, the s&p looks very good. earnings and fundamentals are very strong. and it just -- we're getting close to the top of valuation range. we're getting, you know, a little pricey. so i think our appreciation for the rest of the year is somewhat limited. >> well, you know, that's exactly the point that many individual investors are kicking themselves, saying why didn't i put in money sooner. we have the s&p up 8.5% so far this year, and they're wondering, has it gotten too expensive and it's too late for me to get in. you say there's still a couple stock areas where investors can make some money for the rest of this year and beyond. one category that you have identified, you call retailers in transition. which is a retailer you're recommending most right now? >> one of the retailers i like that is definitely a value play,
it's trading at only what we call 13 times -- 13.5 times forward earnings, which is basically just a lot cheaper than everybody else -- a lot cheaper than its fears is fossil group. it sells watches, and it's been struggling this year as it transitions to more online sales, as well as issuing new product lines. they're doing a lot of watches with designers like michael kors and terry burke and looking at smartphone watches. so this has come with some increased cost. but we're looking that growth to really ramp up next year. >> another category you have this next group you call high-quality winners that have been returning cash to investors and you talk about apple. and i hear the stock that is trading at a new record high. why apple? >> apple is a stock you can buy, and i don't necessarily advocate market timing. that's very difficult to do.
apple, you can just by at any time. they offer about a 2% dividend yield, as well as returning about 5% in share buybacks. so overall, you get about 7% of the price of the stock returned to you in cash that apple buys back in stock and dividends. it's also very high-quality. it has a very strong balance sheet. has lots of cash. which means it can acquire other companies very easily, just like it recently bought beat electronics. so it can get growth for those acquisitions. >> i want to squeeze in the last one. an area you call industrials with free cash flow and you say airlines. southwest airlines, luv, the ticker symbol. can you give one or two reasons why you like this? >> really strong balance sheet, great free cash flows. one of the best balance sheets out of all the airlines. and their acquisition of air tran has really helped them grow. >> erin, thank you so much for coming on the program.
erin gibbs of s&p capital iq. two major drug companies, arch competitors, and also dow components. they're teaming up, pfizer and merck have agreed to work together to test a new combination cancer therapy. investors pushed pfizer shares up 1%, making it the best performing stock on the blue chip index. merck's rose a fraction of 1%. nick terrell has all the details. >> reporter: they're some of the biggest names in pharmaceuticals. pfizer and merck. often rivals, coming together now to battle cancer. the companies said today they plan to collaborate to test two drugs in combination. >> it's a scientific community, they learn more about cancer, they're finding new ways to treat cancer. and a lot has to do with combination therapy. the combination therapy allows drugs to work on multiple mechanisms of action so they can have a more effective way of treating the cancer over the
long-term. >> pfizer's drug is approved to treat lung cancer. a targeted therapy thought to drive the disease. merck's therapy is under review at the fda. it's in a new class, drugs that harness the immune system to fight cancer. it's also known by its target, pd-1. >> pd-1 is a molecule found relatively recently that seems to tamp down immune responses. and so if you block it, under circumstances where there's an immune response already there, directed against the tumor, if you block that, then you can now reveal that immune response, and the effects can be quite dramatic. >> the burgeoning field of immuno therapy drugs also means big business. morning star analyst damion canover estimates merck's therapy can drop $5 million in annual revenue. and bristol-myers, astrazeneca and roche, he says, could bring the market to almost $20 billion. merck and pfizer are building on collaborations already in place on two other pfizer therapies
and the same merck compound. >> the results that we have seen with pd-1 blockade are so remarkable. my view was, we needed to do everything we could to understand that for the benefit of cancer patients around the world. >> reporter: roger pearlmutter told us after learning how the drug works on its own, combinations are the future for this technology. >> if we can understand how best to use this therapy, we'll be able to add to that other therapies, not only those we have developed, but those that we can identify that other people have developed, where we can participant with them or acquire those therapies. i think the opportunities are enormous. >> the hope is that in fighting cancer, two drugs are better than one. for "nightly business report" i'm meg terrell. best buy didn't live up to its name. it posted another disappointing quarter, the third in a row. the largest specialty consumer electronics retailer reported lower than expected revenue, down 4%.
best buy expects continued softness until the newest models come out. the company had cost cutting and better online electronic sales. that wasn't enough to help shares, which dropped almost 7% today. best buy also echoed a theme repeated by many other retailers recently. more and more customers are buying online. so how do companies get more foot traffic into their brick and mortar stores? courtn courtney reagan tells us about some ideas that seem to be working. >> reporter: traffic. for most of us, it's a hassle. for retailers, the holy grail. just getting shoppers in the store has become a feat. while many retailers say a sale on their website is just as good, a sale in their stores is technically more valuable, because the high overhead cost of operating a store fleet. still, retailers are learning online and mobile presence must be as strong as the experience in store.
the web used to be feared by retail. but now it's not only embraced, it's depended on. according to com score, nearly three in four mobile shopping searches resulted in consumers making a purchase in-store. so when it comes to driving traffic, retailers are looking to the web and mobile to get consumers to shop in-store. >> the good news for retailers and why we continue to see sales improve year over year, is that what's coming into the store is actually a high-value proposition. somebody who has already researched the information has a good idea what they want to buy, and then they're coming to the stores to execute the purchase. >> reporter: best buy's ceo tells me shoppers are browsing online first, so their trips to the store are more targeted. which means store traffic is going down, but converting trips to sales is going up. target has seen huge growth rates for cartwheel. its app that offers discounts and coupons for consumers on
mobile devices or through facebook. but requires in-store purchasing. nordstrom's acquisition of haut look is driving traffic to its stores. shoppers are returning online purchase haut look items to nordstrom rack stores, noting its a traffic driver for rack stores. jcpenney says its sales comes from originating in the stores. with 30% of penny's online business, pickup in store, the possibility of shoppers grabbing a couple more items while there increases. while e-commerce browsing is driving consumers to stores, promotions remain tops when it comes to driving traffic. macy's cfo karen hogay recently acknowledged the department store sees less traffic when offering fewer promotions. and it's a retailer analysts mark is best in class when it comes to its website and
in-store offerings. for "nightly business report" i'm courtney reagan. >> when it comes to shoes, foot traffic has a whole different meaning and dsw seems to understand it. second quarter profit rose a better than expected 1.8%, as net sales and same store sales increased. dsw also raised both ends of its full-year earnings guidance by 5 cents a share, although it predicts flattish same store sales. shares jumped to $30.99. still ahead, the home of the whopper moves to canada. and moving with burger king, one of the most respected investors of all-time. we'll explain.
burger king made it official today. it will buy canadian doughnut chain, tim horton's, for about $11 billion. the new fast food giant will be based in canada, where the corporate tax rate is less than here in the u.s. now, in an unusual twist, warren buffett and his berkshire hathaway will provide about 25% of the financing. in a complicated deal, the legendary investor is expected to buy preferred shares. as a result, the u.s. will actually receive more taxes, rather than less, because berkshire will have to pay full and higher u.s. taxes on the dividends it earns from the canadian and foreign parent company. now, as we told you last night, amazon is making a major move into the lucrative video game business. the internet giant is buying twitch for almost $1 billion in catch, one of amazon's biggest acquisitions ever. julia boorstin explains.
>> reporter: twitch, where others play video games, has been called the espn of the future, because the surge of interest in watching game play. here's what twitch co founder justin khan said in june. >> over 1 million people broadcast gaming every month. we have over -- every -- on average, the engagement is extremely high. we have about 45 million people who tune in around the world to the content. and that equals about 13 billion minutes of video watched every month. so the engagement on a per user basis is high. people are tuning in every day for over an hour. >> reporter: it comes after google and yahoo! both showed interest in the company. amazon will run as an independent subsidy area in san francisco and web video. amazon has been hiring more gaming programmers and promoting new games and the video game controller it sells for its fire
tv set, top box. now it has a direct line to gamers to sell the latest games and consoles. ethan kerzwhile says amazon will help bring twitch to the next level. >> i think it's showing their aspirations to be in live entertainment, as well. it's hard for me to predict exactly what the future holds. i know the twitch team has some very big plans and i expect that's only going to speed up and go faster. >> reporter: twitch could also help amazon grow its online advertising business. since it reaches the young male demographic that's so hard for advertisers to reach, helping twitch charge much higher prices. for "nightly business report" i'm julia boorstin in los angeles. tonight's market focus. american airlines said its with drawing its flights from the travel website, saying it was unable to reach agreement on a long-term contract. us airways, also owned by american, will withdraw its fares september 1st. but american flights were
pulled. shares tumbled 4.5% to $8.04. an earnings miss on the top and bottom lines despite disappointing results. a watch maker says it expects sales to accelerate in the second half of the year and affirmed its full-year forecast. still, the stock fell to $40.64. and ink spiked in today's session on a reuters report it hired jpmorgan to explore a possible sale. we told you last night two activist investors are urging the company which owns ann taylor to explore strategic alternatives, including putting itself up for sale. the stock popped to nearly 5%, to 41. $7. well, drones could be making a debut at disney world. walt disney has filed three drone-related pants that could lead to an era of puppets flying
through the sky. it could be an alternative to the fireworks and light shows at the company's theme park. shares were up slightly to $90 and change. after the bell today, cable reported earnings on strong subscriber growth but revenue and guidance were disappointing. also in that report, the company announced a $350 million share buyback program. separately, tivo says it's introducing a new dvr for customers without cable or satellite tv. the device would record both over the air broadcasts and streaming online networks. after the report, shares were volatile. during the regular session, the stock was up 2% to $13.90. and smith & wesson reported earnings, but sales were below forecast on weaker demand for its guns. its third quarter and four-year guidance also came in below estimates. shares initially plunged after hours. during the regular session, the stock was off at $13.10. looks like american
consumers are doing a better job of paying credit card bills on time. transunion, the credit reporting agency, says the rate of payments at least 90 days overdue fell to the lowest level in at least seven years. that good news comes as consumers are using credit cards more and charging more. well, a week from today, kids head back to school, and most americans return to work. september is a time when everyone, no matter how would you are, buckles down and gets serious about business and financial issues. so lets it turn to financial planner, tim mauer, for some of the abcs of smart investment moves. he's with bam alliance. tim, we always know whenever the market is doing well and hitting records we were just reporting, people get excited but very nervous, am i making the right moves with my investment portfolio and everything i should be doing with my life. and this is one of those times. it also coincides with the end of summer. so we want to turn to you for some of the to do lists of what people should be doing, and as
we have learned from you, one size does not fit all. so we have broken it up no a couple of age categories, starting with the millennials. what should people in their 20s be doing right now? what's on their checklist? >> well, susie, everybody wants to tell the millennials what to do, and there is a apathy reported out there, a sense of entitlement. having taught millennials for several years, i enjoy working with them. and here's one piece of advice i would recommend. they may have heard you're supposed to get yourself established and go out and buy a house. as a generation, millennials especially really crave freedom and flexibility. so i suggest they not necessarily go out and tie themselves down geographically with that big asset, and presumably the mortgage to go along with it. i think it's probably best they find their direction first, and then make that major purchase. that said, i do think millennials should be stocking up on those retirement plans of tax-qualified dollars to reduce their taxable income, but also
to get that savings for retirement going before they get a little bit older. get themselves established, have a high mortgage, a couple kids they have to pay for. i think it makes sense to save early for millennials especially. >> you're talking about 401(k)s and putting in stocks in the retirement funds, right? >> well, that's the expectation, susie, is that you're young, you should be putting everything into stocks, because you can afford to ride it out. unfortunately, nobody likes losing money, depending -- no matter how old they are. so i actually do recommend the millennials have some fixed income that their portfolio, because many of the generation before them got hammered in 2008, and they didn't want to go back for many years. >> let's move on to the next group. these are the gen xors, maybe are married, do have kids, in their 30s and 40s. what move should they make now? >> 30 and 40-somethings have one
primary recommendation they need to hear. if you do not have a will that stipulates the guardianship, the trustee, for your minor children, that is the most important financial planning recommendation right now. forget 401(k), forget everything else. go right out, find an estate planning attorney and draft a will. because otherwise, heaven foeshld you and your spouse go down with the ship, it's the state who is going to decide who is your parent -- who is the new parent of that child. >> okay. >> life insurance is another big one, susie, that i want to mention. it is very important, because it at this stage of the game, if something happens to income earners, they're going to need the o -- the household is going to need an influx of cash. you don't have to do anything crazy. i don't recommend permanent life insurance. i think 15 times of your income in 20 to 30-year term is going to get the job done for most folks. >> let's move on to what you're calling the empty nesters. people in their 50s, 60s, gotten their kids through college, kids
are married and grown up. what should they be doing right now? >> hopefully the kids are married, grown up, out of the house. at least past college, right? the most expensive time for parents is putting kids through college. thereafter, the empty nesters in most cases are going to need to backfill their retirement funding that they weren't able to fully max out while they had the kids at home. so here's where i recommend maxing out that 401(k), that $17,500 per person, per year, and if you're over 50, add on another 5500 per year for those folks in order to back end their retirement planning. >> real quickly, what's the most common mistake that any one of these investment groups do, these demo groups? >> i think the biggest mistake any of us make at any age is to do anything drastic, especially when we're looking at market highs. everybody is thinking, oh, no, i should have gotten in earlier. maybe i should get out now. i recommend balance throughout our lifetimes. shifting more and more toward
conservatism as we age. that way no matter what happens, your portfolio would be ready to handle it. >> okay. i feel like i've got a huge homework assignment. so -- >> sorry about that. >> a lot to think about. thanks so much, tim. bam alliance. and still ahead, what happens when farmers are up to their ears in corn? the answer may be one farm equipment company doesn't want to hear. that's coming up. poultry producer, sanderson farms, missed earnings estimates in third quarter. profits and sales both lower than expected. sanderson says it processed less fresh poultry than it forecast last spring because fewer birds
hatched and the chickens weighed less. shares down 6% to $89.79. meanwhile, down on the farm, they're getting too much of a good thing. good weather has led to a bumper crop of corn. and that's what many are talking about at the nation's largest outdoor farm show in iowa. but as jane wells reports, for farmers having too much of a good thing is costing them. >> reporter: carol miller is checking her corn. >> it's getting closer to being mature. >> reporter: that means it's also getting close to harvest, which is expected to set a record. more than $14 billion bushels of corn may produced in the u.s. this year, a lot more than when we first met miller two years ago in the middle of the worst midwest drought in half a century. >> we probably are going to lose 20 to 40% on something like that. >> reporter: that was 2012. and now? now you have too much corn. >> i can never say too much. >> reporter: there is so much corn coming, prices have collapsed to lows not seen in years.
some suggest corn is now selling at below break-even levels. and that means farmers are going to cut back on their spending. equipment makers at the massive farm progress show in iowa this week are figuring out how they're going to weather a down turn, which some analysts say could last years. >> i think we're going to see it across the whole ag value chain. farmers looking at ways to cut costs, whether in fertilizer or inputs. >> reporter: deere laying off workers, and offering more software services to help farmers measure growth and improve profitability. >> i wouldn't call what's going on right now in the agricultural industry anything like a catastrophic down turn. it's a mild downturn. we're still going to have farming well above the ten-year average. >> this is one that is fully mature. >> reporter: carol miller was thinking about buying a combine, a used one. but she is holding back until she sees how the harvest goes. >> it looks like a good year. then again, we won't know until
we get the combine in the field and get going. >> reporter: for "nightly business report," jane wells, boon, iowa. >> to read about the potentially record-setting corn harvest and impact on farmers, go to our website, nbr.com. and that's "nightly business report" for tonight. i'm susie gharib. thanks for watching. have a great evening. we'll see you tomorrow night.
the overwhelming numbers say he pushed me to do things i never thought i could do. he drove me nuts at times. it was the greatest experience in my life. ♪ people who tour these galleries off say, wow, i had no idea. many think computing is about scientists, engineers and mathematicians. but if you've ever texted, e-mailed shopped online or used a smartphone you know computing is about you. few understood that better than steve jobs, one of the most visible and celebrated executives in computing histo